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Overview of Dermatology Billing Services

January 7, 2013
Dermatology Medical Billing Services

Dermatology billing doesn’t require an advanced degree, but it does require attention to detail.  There are a lot of details.  Medical coding and billing are demanding professions that require the mastery not only of the language of coding, but a quagmire of laws, rules, regulations, and contractual obligations.  While the practice of dermatology is both an art and a science, running a dermatology practice is a business.  The most important component of the business is billing accounts receivable.

The foundation of dermatology billing is the medical record.  Certified and credentialed coders abstract the contents of the patient’s record into industry-standard code established by the Health Insurance Portability and Accountability Act of 1996 (HIPAA).  This act sets standards for reporting healthcare claims electronically, utilizing standardized diagnosis and procedure codes.  Under the Patient Protection and Affordable Care Act of 2010 (PPACA), diagnosis coding is about to undergo a change from ICD-9 to ICD-10.

Dermatology procedures are described by Common Procedure Terminology (CPT) codes.  These codes are designed by the American Medical Association to provide specific information about exactly which reimbursable procedures are performed during a patient office visit.  The contents of the medical record are the source of what codes get submitted in CMS-1500 claim format.  CPT is very precise in its introduction, stating that codes should not approximate of what was performed.  The medical record must substantiate the code billed without room for questions.

CPT code definitions seem straightforward at first glance, especially dermatology procedure codes.  An entire section of CPT is dedicated to procedures of the integumentary system.  However, without familiarity with the codes‘ working definitions, some dermatology practices unwittingly submit false claims.  There is a methodology to each code set that requires being aware of the various factors that influence how codes are assigned.  Some procedures are determined by the size of a procedural site, and how that size is determined differs from code to code.  For some procedures, size is determined by the greatest dimension, while others require math skills to calculate square centimeters.  The thickness of an excision, or the method of destruction can influence CPT code assignment, as can the seriousness of the confirmed diagnosis.

Skin graft procedures are determined by size and by the graft material used.  The medical record must clearly document the graft material.  If any information is missing from the medical record, a clean claim cannot be submitted for procedures performed.

In addition to ensuring that the CPT codes submitted for payment match the contents of the patient record, professional dermatology coders know the requirements established by third-party payers to ensure prompt payment.  The AMA establishes common guidelines to assist in code selection, but payers are free to fine tune the definitions, requiring some codes to be combined with others when two procedures are performed during the same patient encounter.  The Medicare program utilizes the National Correct Coding Initiative (NCCI) to determine which codes must be bundled when performed together.  Commercial health insurers generally follow NCCI guidelines while also establishing their own interpretations.  When a dermatology practice agrees to participate in a healthcare plan, they agree to submit bills according to that payer’s standards.  Every payer has different exacting rules.

The medical necessity of dermatology procedures is provided by diagnosis codes.  Currently, medical conditions are reported using ICD-9-CM codes.  These will soon be replaced by ICD-10 codes.

ICD-10 codes will entail greater specificity of the information communicated between physician and insurer.  This is good news for a dermatology practice because it means that medical necessity will be more clearly established for services provided.  The transition may require greater detail in medical documentation, but when the new coding system goes into effect, it should reduce billing denials and appeals.

Dermatology practices that employ professional medical coders and billers see their claims paid promptly and without confusion.  If a payer performs an audit, as CMS routinely does through its RAC program, practices with professional billing services won’t suffer from insurance take-backs or penalties.  Clean claims ensure business solvency.


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